Monday, September 22, 2008

Here's some more about this nutzoid "mother of all bailouts": aside from the fact that it will cost $700 billion, look what it does to the Treasury secretary...

The Economist:"Mr Paulson’s plan is stunning in its brevity (two-and-a-half pages) and audacity. It would authorise him to purchase any “residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages,” implying the right to take over derivative positions. A fact sheet later distributed by the Treasury broadened it to include “other assets, as deemed necessary to effectively stabilise financial markets.” The government could, in effect, buy anything it wanted: student or car loans, loans, equities, entire companies.

The Treasury secretary’s decisions “may not be reviewed by any court of law or any administrative agency.” He would report to Congress three months after the programme begins and every six months thereafter. It is now conventional wisdom that recent events have guaranteed a heavier regulatory hand for government in the economy. Mr Paulson’s programme raises the prospect of it becoming a huge player in the allocation of capital as well. The ability to buy assets expires after two years, but its management of those assets would continue.

Mr Paulson said that the lack of oversight gives future administrations “flexibility to run this any way they would like to run it.”

Andrew Sullivan:"In the last few years, we have seen the executive branch declare itself outside the law - in prosecuting a war on terror. The law against torture has been suspended. The balance between the executive and legislative branch has been dismissed by signing statements and the theory of the unitary executive. The executive has declared its right to suspend habeas corpus indefinitely, to tap anyone's phones without court warrants and to detain and torture anyone it decides is an "enemy combatant." In that sense, we have already left the realm of constitutional government in favor of a protectorate outside the law promising to keep us safe (but never from itself).

"But this new move to create a de facto dictator for the financial markets, to invest a Treasury secretary with unprecedented powers to buy and sell at close to a trillion dollar level - with no oversight or accountability: this is a new collapse in democratic life and constitutional norms."